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As the "New Normal" is on the doorsteps, our Partners Casper Veenman and Jan-Philipp Hasenberg reflect on what the new situation means for the Automotive industry and how to adjust long-term strategic alignments.

Electronics and software are revolutionizing automobiles and the entire industry

For more than 120 years, the car was a means to an end, with the aim of getting from one place to another in the shortest possible time. The automobile stood as an isolated system with a motor in the garage, which was switched on and off as required. This has changed step by step over the past few years – and the shift will be even more striking in the near future as it has been up until now. The cars of the future are computers on wheels and will be permanently connected to their surroundings. The far-reaching consequences this will have on the entire automotive industry are shown in Roland Berger’s study, “Computer on Wheels/Disruption in Automotive Electronics and Semiconductors.”

Most innovations in the automobile sector are based on electronics or software. The car is thus increasingly becoming a system within a system of systems – and moreover part of the
Internet of Things (IoT). This development also has a downside: the "computer on wheels" is having dramatic effects along the entire value chain.

New roles for manufacturers and suppliers

The electronic architecture of the automobile is fundamentally changing. In this context, there will be stronger segmentation between hardware and software. One of the consequences of this is that the roles of all players will have to be redefined: while
OEMs will spend considerable resources on module integration in the future, semiconductor companies will increasingly develop into software suppliers. Meanwhile, service providers will expand into other areas, while software suppliers, in the future, participate in the entire value chain.

The industry has already responded to these developments in some areas: for example, car manufacturers are entering into partnerships with competitors and forming consortia with semiconductor specialists. Such cross-player partnerships will become more frequent in the future as they need to combine forces.

The "computer on wheels" does not only shake traditional roles. It also affects the cost of automotive electronics.

Electric mobility as a central cost driver

The "computer on wheels" does not only shake traditional roles. It also affects the cost of automotive electronics. The cost of electronic modules for a typical premium car today is US$3,145. For a semi-autonomous, electrified car, as the study also shows, these costs will more than double to US$7,030 by 2025.

About a quarter (US$725) of the costs can generally be attributed to digitalization. However, the strongest cost driver is
electromobility. This is because more than half of this increase in costs (US$2,235) results from the electrification of the powertrain. In the case of autonomous driving, the additional funds required for automotive electronics (US$925) are attributed to computing power and sensor technology.

Answering urgent questions

In view of these and
other dramatic changes, no player can afford to simply proceed as usual. Instead, urgent questions must be answered. How can a competitive advantage be achieved through a changing understanding of roles? Which partnerships and capabilities need to be established or expanded? And what is the best approach for the procurement of electronics and semiconductors?

To answer these and other questions, we have developed a four-point plan for the industry that serves as the basis for all necessary steps. This plan and additional information on the topic can be found in the Roland Berger study, "Computer on Wheels / Disruption in Automotive Electronics and Semiconductors."

Study

The car will become a computer on wheels

The car of the future is an electrified, semi-autonomous computer on wheels – turning an entire industry upside down.